Wal-Mart execs keenly focused on improving comparable sales and driving top line revenue are testing a new “Savings Catcher” pricing tool as a way to drive in-store traffic and hammer home the low price message.
Duncan Mac Naughton, chief merchandising officer for Walmart U.S., said Savings Catcher is one of the new data innovations they are eager to share with consumers. Mac Naughton said recently that Savings Catcher is being tested in seven cities: Charlotte, N.C.; Dallas; Lexington, Ky.; Atlanta; Minneapolis, Minn.; Huntsville, Ala.; and San Diego.
“We know we have to innovate to make savings easy for our customers. We still match prices at the register but Savings Catcher goes bit further,” Mac Naughton said.
The system is simple. A customer who shops at a Walmart store in the test cities will have bar code and “TC number” on the bottom of their receipt. The number is entered into the Walmart website for the program.
According to to Mac Naughton, the system then analyzes all grocery advertisements in the area, and if other retailers had a lower price the difference is credited to the shopper on a Walmart gift card.
The program only pertains to grocery. It does not include general merchandise or electronics, which is one of the several ways Wal-Mart has protected itself with this program, according to analysts.
“At first glance I like the program. Psychologically, it could resonate with the customers. It should also help to drive in-store traffic. It will be interesting to see if the program is expanded,” said Jason Long, CEO of Shift Marketing Group.
He said it hasn’t been that long ago that Walmart was the clear leader in low prices in the minds of most consumers. But Dollar Stores, Aldi and aggressive pricing from Kroger, HEB and other grocers have nipped away at that image.
Because Wal-Mart is controlling the eligibility of various items, promotional situations and advertising scenarios, any comparisons will most likely reinforce Walmart’s value proposition rather than compromise it, said Carol Spieckerman, CEO of NewMarketBuilders. She also said the program brings the customer into the relationship.
“The genius of Walmart’s Savings Catcher program is that it adds a new dimension to its price match guarantee while continuing to make it incumbent upon shoppers to take the initiative. Walmart can satisfy shoppers who are truly price sensitive and message value and price transparency to everyone else without lowering prices across the board. It offers the best of both worlds,” Spieckerman said.
Long said it’s obvious the retailer is insulating itself against major risks by having the consumer take the initiative to sign up and then take an extra minute or two scan the bar code into the phone or key in the numbers on the website.
Walmart also is limiting the price match to branded only grocery items that are published as “on sale” by the competitors. For instance, if the everyday low price on a particular item is cheaper at a competitor and it’s not published in the sales circular, Walmart’s system may not compare that item.
While Walmart is comparing against other low cost grocers such as Aldi, only branded products are eligible. Most of the items sold at Aldi are private label. Other retailers included in the comparison are numerous traditional full-service grocers and higher-priced convenience pharmacies such as Walgreens and CVS that use loyalty discounts. Target, Dollar Store and Dollar Tree were also listed as competitors in the program.
However, Walmart said it will reward coupon users when a competitor is found to have lower on-sale prices. For instance, if a shopper buys Oreo cookies at Wal-Mart for $2.50 and uses a 25-cent coupon for a total cost of $2.25 and a competitor advertises those same cookies at $2 on sale, Savings Catcher will refund 50 cents back to the Wal-Mart shopper in a gift card (Walmart).
Long said given the restraints on the price checks (branded, on-sale groceries) it could take quite a lot of time to build up any meaningful credit. Even so, he said consumers like to spend cash back.
“If they have $3 on a card, they are apt to come into a store and spend that and more,” Long said.
Stephen Quinn, executive vice president of marketing at Walmart U.S. said recently that Wal-Mart was committed to “show customers even more savings, and prove it to them (more) than we been able to do in the past.”
Wal-Mart’s continued investments in @WalmartLabs, is giving the retailer a leg up against some of its competitors.
Long and Spieckerman said Savings Catcher offers data-gathering benefits for the mass retailer that can be leveraged to help consumers realize savings while also showing Wal-Mart exactly what items certain customers are buying. Spieckerman has said Wal-Mart’s continued investments into data-rich technology startups gives the retailer enormous insight and future omnichannel opportunities.
“Any time a customer enters a receipt number, Wal-Mart will gather data that will enable it to further refine its value proposition and localized pricing strategies. Another example of a multi-benefit program from Wal-Mart,” said Spieckerman.
With Savings Catcher, Walmart is taking its data capabilities and putting it in the hands of consumers, according to Kantar Retail.
“They have the data capabilities, why not use it to their advantage,” said Leon Nicholas, senior vice president of retail insights for Kantar Retail.
Some experts believe it won’t be long until Savings Catcher will plug into Amazon. ASDA, Wal-Mart’s British retail banner, has been using this program for sometime. But there is no gift card option at ASDA.
Others wonder how else the retailer might use data it collects from shoppers who sign up. For instance, the retailer could use the data to make predictive shopping lists for specific customers, with the info delivered via smart phone when they enter a Walmart store.
Or Walmart could send alerts for rollbacks or other reduced pricing on specific items they know the shopper regularly purchase. This type of individualized marketing is already active with Walmart.com.